General Motors’ Layoff Announcement Could be Leading Edge of U.S. Auto Industry Downsizing

Interview with Richard D. Wolff, professor of economics of New School University's graduate program in internnational affairs, conducted by Scott Harris

Posted Nov 28, 2018

In an announcement that caught the nation by surprise, General Motors announced on Nov. 26 that the company will lay off up to 14,000 workers in North America and close 5 auto manufacturing plants. Factories slated to be closed by the end of 2019 include the Lordstown Assembly plant in Ohio; the Detroit-Hamtramck Assembly plant in Michigan; the Oshawa Assembly plant in Ontario, Canada; the Baltimore Operations parts plant in Maryland and the Warren Transmission Operations plant in southeast Michigan.

The GM layoff announcement comes before a predicted downturn in the economy, with additional layoffs expected soon from automakers Ford and Toyota. GM and other car manufacturers say that with changes in consumer demand, they’re reducing their production of sedans and increasing the number of SUVs and trucks made in North America.

GM’s layoff announcement comes less than a year after Congress granted the auto industry major tax cuts – and nine years after GM received a $50 billion taxpayer bailout during the Great Recession. Between The Lines’ Scott Harris spoke with Richard D. Wolff, professor of economics emeritus at the University of Massachusetts, Amherst and who is currently a visiting professor in the graduate program in international affairs of the New School University, New York City. Here, Wolff assesses GM’s layoffs, and the role government could play in alleviating the economic pain that will be felt by millions who will be impacted by the massive layoff.

RICHARD D. WOLFF: Let’s remember that this is only an announcement by one major automobile company, General Motors. We will await in the next days and weeks what other challenged car companies are doing – both American companies like Ford, but also foreign companies that have plans here in the United States.

So it may be that this announcement, horrible as it is, is basically saying that General Motors is cutting roughly 15,000 jobs in the United States and Canada. And considering the season, this is an amazing choice of date to do this. It’s like a Christmas present of the horror kind for these people. But, of course, it’s not only for those people, because if these cutbacks go through as I expect they will, they are the end of the Chevy Impala, the end of brands of the Buicks and so forth. This means other people who used to have jobs producing the parts for these cars, they will not have jobs either.

The ramifications and the ripples will hurt literally hundreds of thousands of people before this is over. That’s the first thing. The second thing is these automobile companies were on the verge of bankruptcy. Certainly, GM was a bear 10 years ago and they turned to the American people through the government for a bailout, which they got. General Motors alone got $50 billion, an unheard of amount of direct subsidies to a manufacturer in the United States, probably the biggest one in history at least until that time. Eventually, the company paid it back, but not all of it. It paid it back short $10 billion. Nor does it pay interest for all the time that it had the people’s money with which to keep itself going and it took all kinds of steps then under the protection of the government to allow itself to hire workers at lower pay, to get rid of their health program for retired workers – things that they justified, even though that hurt lots of people on the grounds that now with all of this support and the billions of taxpayer money, they would be able to assure a good future for what was left of the automobile industry.

And here we are, a bare 10 years later, and once again they are telling us they are at death’s door, that they have no choice – what they always say, and they’re repaying the kindness of the American people to bail them out by slashing, as I say, 15,000 jobs with the ramifications coming and making God knows what trouble.

But here is the final point and maybe the biggest one, these steps are taken to assure the profitability of General Motors. To read the statements they released, they’re telling stories about how Americans don’t want to buy sedans anymore and they’re simply having to adjust to not produce what the public doesn’t want. And they have to invest in electric vehicles. They have to invest in self-driving vehicles. Well, come on, this has been known to be a problem for at least a year or two already. They didn’t take the steps to prepare themselves for this transition. They are now deciding that what’s good for the profits of General Motors is to throw 15,000 people and Lord knows how many communities and families and feeder jobs under the bus and we should have no delusion. Masses of people will suffer so that the relatively small number of people with a significant ownership of shares in General Motors will do better. We know in America that the richest 10 percent of our people own 80 percent of the shares of companies. To do something that hurts working people in order to provide greater profits to the share owners has to be rewritten for what it is. It’s hurting the majority to profit a minority that is already rich and that is a system that this country has long been overdue to question and to replace. And I think this General Motors thing only makes that more obvious and more urgent.

Progressive, independent analysis

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